The hard part about this column is that the topic must be up-to-date. When I managed to find an interesting topic, it was no longer interesting, mainly because of unstable politics. The current political standoff has taken a heavy toll on foreign investment, tax incentives and wages policies.
In the stock market, there is an index call Geopolitical Risk Index. The longer the government formation, the future trade policies, and the political stability are determining factors in the flow of foreign capital.
When we look through a macro-economic lens, Thailand’s road to recovery appears to be a long way as the three factors which drive the economy including consumption, private investment, and government expenditure, are also subject to state-funded infrastructure projects.
We can say that the country is now in a limbo because everything has been on hold. The biggest saviors are currently tourism and exports because these two industries do not heavily rely on politics but they, too, don’t have a bright outlook.
Earlier this year, the US National Oceanic and Atmospheric Administration (NOAA) forecasted that El Nino – a climate phenomenon involving in increased global temperatures – is going to persist throughout this year. That will certainly affect harvest output. As an agriculture country, this doesn’t only have an impact on exports, but also food prices in the domestic market, not to mention the slow recovery of some industries such as automobile and electronics.
The hospitality seems to be the only solution. Tourism revenues have already begun to pick up in the second half of this year. In May, the influx of Chinese tourists was so overwhelming that airlines had to increase the number of flights. While the Thai government expects the number of tourists will reach 25 million this year, research institutes believe it could rise to 28-30 million.
What does it mean for Thailand? With so many variables, it’s always safe not to put all your eggs on one basket. Regardless of the political direction and economic situation, it’s always wise to err on the side of caution when it comes to spending and investing our money.
